The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter

41 Pages Posted: 25 Nov 2019

See all articles by Cecile Couharde

Cecile Couharde

CEROS, Paris Nanterre University

Olivier Damette

BETA-CNRS, Université de Lorraine

Rémi Generoso

LEM-CNRS, Université de Lille

Kamiar Mohaddes

University of Cambridge - Judge Business School; University of Cambridge - King's College, Cambridge

Date Written: November 22, 2019

Abstract

This paper contributes to the climate-economy literature by analysing the role of weather patterns in influencing the transmission of global climate cycles to economic growth. More specifically, we focus on El Niño Southern Oscillation (ENSO) events and their interactions with local weather conditions, taking into account the heterogeneous and cumulative effects of weather patterns on economic growth and the asymmetry and nonlinearity in the global influence of ENSO on economic activity. Using data on 75 countries over the period 1975-2014, we provide evidence for the negative growth effects of ENSO events and show that there are substantial differences between its warm (El Niño) and cold (La Niña) phases and between climate zones. These differences are due to the heterogeneity in weather responses to ENSO events, known as teleconnections, which has so far not been taken into account by economists, and which will become more important in the climate-economy relationship given that climate change may substantially strengthen long-distance relationships between weather patterns around the world. We also show that the negative growth effects associated with these teleconnections are robust to the definition of ENSO events and more important over shorter meteorological onsets.

Keywords: economic growth, ENSO events, weather shocks, climate change

JEL Classification: C33, O40, Q54

Suggested Citation

Couharde, Cecile and Damette, Olivier and Generoso, Rémi and Mohaddes, Kamiar, The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter (November 22, 2019). CAMA Working Paper No. 82/2019, Available at SSRN: https://ssrn.com/abstract=3491507 or http://dx.doi.org/10.2139/ssrn.3491507

Cecile Couharde

CEROS, Paris Nanterre University ( email )

200 avenue de la République
NANTERRE, 92000
France

Olivier Damette

BETA-CNRS, Université de Lorraine ( email )

Lorraine
France

Rémi Generoso

LEM-CNRS, Université de Lille ( email )

Cité Scientifique
Villeneuve-d'Ascq, 59650
France

Kamiar Mohaddes (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 (0)1223 766933 (Phone)

HOME PAGE: http://https://www.mohaddes.org/

University of Cambridge - King's College, Cambridge ( email )

King's Parade
Cambridge, CB2 1ST
United Kingdom
+44 (0)1223 766933 (Phone)

HOME PAGE: http://https://www.mohaddes.org/

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